The Hindu Business Line : ‘Panvati bull’ responsible for the fall?

Chennai, Jan. 23 Never expect rational behaviour in the stock market is a well known fact. And what has been transpiring at Dalal Street – the most visible symbol of the Indian equity market – during the last few trading sessions is only a pointer to this.

On Tuesday, when the Indian market saw its largest ever fall, angry investors unleashed their frustration on the bull that was installed at the BSE barely two weeks ago, and gave it the label of “panvati bull”; (panauti is the Hindi equivalent which means disaster). While some threw stones on it, others demanded that it should be ‘thrown out’ of the place as its entry had sent the indices crashing down!

Lifeless bull

The madness went to such an extent, pointed out an equity analyst, that “at a TV channel I was invited to speak, the anchor requested me to refer to the ‘panvati bull’ and say that it was responsible for the downfall.” Of course he refused to oblige.

But the lifeless bull was not the only one to face the fury of disgruntled investors who faced a 60-minute circuit break, a minute after trading began on Tuesday. When valuations reached attractive levels, many retail investors wanted to buy but were not allowed to do so by their brokers, who themselves were in trouble with the exchanges. A couple of franchisee offices of leading broking outfits were damaged by angry investors who even roughed up an odd representative.

Even on Wednesday, as the Sensex danced up by a dizzy 1200 points before closing up at 811 points, many retail investors were not allowed to buy unless they had a credit balance with the broker. When the markets crash, all kinds of horror stories do the rounds and one of these doing the Dalal Street round in Mumbai was about an investor who owed Rs 1 lakh to his broker.

“Instead of selling his shares worth Rs 1 lakh on Tuesday, the broker liquidated his holding worth 10 lakh, and this was clearly a breach of his role as a custodian of the investor,” said the analyst.

Investor Confidence

On the impressive rise in the Sensex, which did provide a much-needed relief to battered and bruised investors/traders, the general consensus seems to be that this will not last.

Said one broker, “The US is in trouble and has hence cut interest rates by 75 basis points. So why is the entire world celebrating? Signs are there that we haven’t seen the last of the jitters in the market.”

He added that investor confidence had been eroded so much by the market meltdown that “on Tuesday many investors stopped their payment for the Reliance Power IPO. Also interest in the grey market on the scrip came down to a virtual zero on Tuesday; somebody was even heard boasting that he managed to by the scrip below the issue price in the grey market.”

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